D2 Cards Flashcards
Vine Pull Schemes
When production is greater than demand, creating a surplus, governments and then the EU itself paid growers to pull up poor quality vines, especially in southern France, Italy and Spain.
Supply Chain
A network of organizations and activities involved from the creation of a product through to its distribution and sale to the final consumer.
Air Freight
Heavily dependent on weight, due to the additional fuel required. Used in special circumstances since it is expensive such as trade/consumer fair, for very high value wines where deadlines are important.
Road Freight
Used for short distance travels. Very efficient as it takes the wine directly from winery to the point of delivery. However for long distances, it is excessively expensive.
Rail Freight
Cost will vary according to the length of the journey and how goods are loaded. Individual pallets are high costs. Can be reduced by containerisation, goods loaded into standard container which is lifted onto the back of a truck.
Sea Freight
Usually the cheapest method for transferring wine over long distances. Containerisation is essential for deep sea shipment. The downside is it’s slow.
Bulk Transportation
When wine is shipped in barrels. Since wine in tank is lighter than bottles, you can ship more wine. Less fuel is required to transport the same amount of wine. Less attractive option for smaller production wines.
Margin
The project margin is the percentage of sales that has turned into profit.
Exchange Rates
Changes to exchanges rates can impact demand for important wines especially in price sensitive markets.
Options
A key strategy used in currency hedging.
Estates
Estate producer produces wine from its own vineyards, retaining control over the entire process from growing grapes to producing and bottling the wine.
Growers
Some growers do not produce wine which allows for them to focus their efforts on producing the best possible grapes. They won’t have to buy or hiring expensive winery equipment and do not have to market and sell their wine. Cash flows are accelerated since payment is due when the grapes are sold rather than when the wine is made or sold.
Grower-Producers
Some growers produce wine from their grapes but sell it to a merchant to mature and bottle. They lose control over the style of wine.
Merchants
Merchant buys immature wine, mature it and sell it under the merchant’s name. They may blend the wines of different producers prior to bottling.
En Primeur
Method of selling wine before it has been bottled. Purchasers buy the wine while it is still in barrel and it remains in the producer’s cellar until it is ready for bottling.
Co-Operatives
Owned by a group of growers, and produce and sell wines made from grapes grown by their members. Can pool financial resources, meaning they can afford more expensive winemaking equipment and expertise that they could not afford by their own.
Custom Crush Facilities
Grower do not own the facility but pay each time they require its services. No need for growers to own winemaking equipment. Finished wine is returned to the grower who can then market it they like and take the profit.
Virtual Winemakers
Don’t own vineyard land or winemaking facilities. They buy in grapes or juice and may rent facilities in another winery or employ the services of a custom crush facility.
